TMI Blog2024 (2) TMI 788X X X X Extracts X X X X X X X X Extracts X X X X ..... section 271D. Levying penalty u/s 271E - assessee-company has repaid loan during the year on various dates to two Company`s Directors, and these amounts paid being more than Rs. 20,000/- - HELD THAT:- As there is an issue of acceptance of loan accepted, issue of repayment of loan on same set of facts and circumstances, hence it does not require separate adjudication. - Dr. A. L. Saini, AM For the Assessee : Shri P.M. Jagasheth, CA For the Respondent : Shri Vinod Kumar, Sr. DR ORDER PER DR. A. L. SAINI, AM: Captioned two appeals filed by single assessee, pertaining to same Assessment Years (AY) 2015-16 are directed against the separate orders passed by the National Faceless Appeal Centre, Delhi [in short NFAC/ld. CIT(A) ], both dated 07.09.2023, which in turn arise out of separate penalty orders passed by the Assessing Officer, under section 271-D and 271-E of the Income Tax Act, 1961 (hereinafter referred to as the Act ), both dated 09.02.2018. 2. Since the issue involved in both the appeals pertain to same assessment year and same assessee, therefore both these appeals have been clubbed and heard together and a consolidated order is being pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it R Shah in the books of A.S Diamond Pvt. Ltd. Date Dr. Date Cr. 16.04.14 400000 15.05.14 450000 02.06.14 250000 12.12.14 500000 02.01.15 500000 16.01.15 100000 27.03.15 500000 Balance 500000 Total 1600000 1600000 Ledger of Shital A. Shah in the books of A.S Diamond Pvt. Ltd. Date Dr. Date Cr. 01.05.14 400000 28.05.14 350000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g assessment stage, assessee submitted the details of the amount taken or repaid by the director on account of current account. The director of the assessee-company took the amount for the purpose of business of the company and whenever it is not required, he re-deposited in the account of assessee-company. Therefore, it was kind of current account, which was maintained with the Director, by the assessee-company for company`s business purposes. Therefore, this current account should not be subjected to any penalty. Moreover, in audit report, the auditor has also not mentioned any violation of section 269SS r.w.s. 269TT of the Act, because these were the normal transactions with the director of the assessee-company, on account of business i.e., on account of current account transactions. Therefore, no penalty should have been levied on the assessee-company. 9. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 10. I have heard both the sides and gone through the relevant material on record. I find merit in the submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is a bona fide reason for the assessee to make cash payments for purchase of land and also acceptance of loan in cash from the Director. Therefore, once the transactions between the appellant company and its director are genuine and bona fide and explanation offered by the assessee for accepting loan in cash is reasonable, then levy of penalty u/s. 271D of the Act, for contravention of provisions of section 269SS of the Act, needs to be verified in light of provisions of section 273B(1) of the Act. 12. Provision of section 273B deals with reasonable cause. If there is a reasonable cause in accepting loans in violation of provisions of section 269SS of the Act, then said transactions needs to be taken out of the rigorous of section 271D of the Act. In order to consider whether there is a reasonable cause in violation of relevant provisions, the explanation of the assessee needs to be considered. If the explanation of the assessee is bona fide and reasonable, then said explanation needs to be considered in light of reasonable cause as provided u/s. 273B of the Act. In the present case, if you go by the explanation of the assessee, it appears that there is a reasonable cau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supra). 14. Coming back to the case laws relied upon by the ld. DR present for the revenue. The ld. DR, took support from the decision of Hon'ble High Court of Madras in the case of Vasan Healthcare (P.) Ltd. (supra). We find that in the said case, the director of the assessee company obtained cash loan from the financer and same was deposited by him in cash in bank account of the assessee and claimed that said loan has been received for the purpose of business exigency. Since, the appellant company has obtained loan from third party financer, the Hon'ble Court held that provisions of section 269SS r.w.s. 271D of the Act, is applicable. In the present case, it is a direct transaction between the appellant company and director and further the assessee could able to explain business exigency and therefore, we are of the considered view that the decision of Hon'ble Madras High Court in the case of Vasan Healthcare (P.) Ltd (supra), is not applicable to the facts of the present case. 15. The ld. DR, has also relied upon the decision of Hon'ble High Court of Madras in the case of P. Baskar v. CIT (Supra). We find that in the said case, the assessee has obtained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive books of accounts for the relevant previous year. In the assessee`s case, it was not a case of loan taken/given from/to public, but amount received/paid to director to meet the business exigencies. Therefore, respectfully following the binding precedent of the Coordinate Bench of ITAT Chennai in the case of Thamira Green Farm (P.) Ltd (supra), I delete the penalty under section 271D of the Act. 12. In the result, appeal filed by the assessee, (in ITA No. No.759/SRT/2023), is allowed. 13. Now coming to ITA No.760/SRT/2023, wherein the grounds of appeal raised by the assessee are as follows: 1. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the levying penalty of Rs. 34,00,000/- u/s 271E of the Income Tax Act, 1961. 2. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has not offered adequate opportunities to hear the case and passed ex-parte order and hence the case may please be set aside and restored back to the CIT(A) or AO. 3. It is therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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